Question

Analyze the time-series data of Balance of Payment of China (Since 2010). Discuss the trend of changes in current, capital and financial accounts. Based on your observation, with other external economic information, what shall the policymakers do in responding to these changes?

Use economic concepts to develop your arguments.

1000 words.

Discuss trend of changes in

a. Current account
b. Capital account
c. Financial account
e. Based on your observation use other external economic information and develop your arguments with economic concepts
f. What policymakers do in responding to these changes?.

(illustrate your arguments with clear organization supported with evidence and statistics) 1000 words

Analysing the current, capital and financial accounts for CHINA.

From 2010 to 2020

find out the balances of current account, financial account and capital account.

Then
describe their trend of changes from 2010 to 2019, try to explain why there were such changes.

Lastly, advise on policymakers about what shall be done based on the observations.

Answer 1

T​​​​ime series data of Balance of Payment of China :-​​​​​​

• First of all we talking about China's Balance Payment releases for the first quarter of 2020 and then after its current account is registered a deficit of RMB 235. 2 billion and its capital and financial accounts registered as surplus of RMB 77.4 billion.
• The current account deals with a country of short term transaction between its savings and investment.
• The capital account is record of the inflows and outflows of capital that affects the foreign assets and liabilities.
• The financial account is component of country's balance of payments that covers the claims.
• Talking about current account balance in 2010 is rises and after 2 years it is fall its repeated again again then after 5 years its started increase.
• In 2014, the capital account and conversion scale system are advanced.
• In the year of 2014 they converted to private capital flows and it sometimes decreases too.
• In many changes occurred they permitted the Chinese elements.
• The RMB utilization is also exchanged world wide.
• The policy makers wants to move forward to develop the capital.
• The China had encountered net flows of private capital.
• Sometimes the RMB increase in value.
• The RMB affects more and more on the out side area.
• The RMB is permitted turn out to be market driven in 2018 by Chinese policy makers.
• And at last the steps have been taken to open certain elements of Chinese economy to prominent venture.
• More extensive economic situations during period for further change.
• In accordance with the economous development differential among China.
• Against the background and given that numerous capital stream limitations were still set up.
• The making of channels through which private capital would have ethe option to stream out of China.
• In utilized to control suges in 2015 and 2016 have been loosened up a few bits.
• For the current account we have credit and debits are maintained in that we have goods and services are there.
• goods :-only credit and debit
• services :- 1.manufacturing services on phisical inputs owned by others. 2 maintenance and repair services. 3 transport. 4 travel. 5 Insurance and pension services. 6 Financial services. 7 charges for the use of intellectual property. 8 Telecommunication, computer. 9 personal, cultural services. 10 government goods and services.
• For capital and financial account we have assets and liabilities, in these we have 1.financial account exchanging reserves assets and direct investment, 2.equity and investment fund shares, 3. debt instruments, 4.financial sector, 5. Portfolio investment, 6.financial derivatives and employee stocks.
• And finally we calculate the net errors and omissions.